Methods of calculating acquisition value of donated property;

The Enforcement Decree of the Income Tax Act, which provides that the market price at the time of donation shall be calculated as the acquisition price at the time of transfer of donated property, has not exceeded the scope of delegation of this Act.

Article 97 of the former Income Tax Act as necessary expenses

Article 163 of the former Enforcement Decree of the Income Tax Act

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of KRW 15,489,510 for the Plaintiff on April 10, 2005 shall be revoked.

1. Basic facts

A. On February 12, 1999, the Plaintiff’s husband, ○○○-dong ○○○○-dong ○○○○○-dong ○○○○○-dong ○○○○○○○-dong ○○○○○○○-dong ○○○○○-dong ○○○○○○, owned one-half share of 3,306 square meters (hereinafter the instant real estate’s portion

B. On January 28, 2005, the Plaintiff transferred the instant real estate at KRW 145,00,000, and on February 16, 2005, on the preliminary return of transfer income tax for the year 2005 following the said transfer, the Plaintiff introduced the instant real estate to the areas under Article 96 (1) 6-2 of the former Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter the same) (hereinafter the same), and thus, reported the transfer value as the actual transaction price. Accordingly, the Plaintiff reported the transfer value as the actual transaction price, and calculated the transfer value as the amount as the amount converted under Articles 97 (1) 1 (c) of the former Income Tax Act, Articles 163 (12) and 176-2 (2) 25, 205, and 290,500,000 won for the transfer income tax under Article 96-2 (3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19254, hereinafter the same).

C. On April 10, 2005, the Defendant deemed the acquisition value of the instant real estate as KRW 32,233,500, and accordingly, issued the instant disposition imposing KRW 15,489,510, which was derived from the transfer income tax amount as transfer income tax for 2005; the above acquisition value of KRW 32,233,50,00, as of February 12, 1999, calculated pursuant to Article 97(5) of the former Income Tax Act and Article 163(9) of the Enforcement Decree of the same Act, pursuant to Article 60 and Article 61(1)1 of the Inheritance Tax and Gift Tax Act, as of February 12, 199, which was the date of commencing the inheritance.

[Ground of recognition] Evidence Nos. 1, 2, Eul's Evidence No. 1, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

In case of calculating the transfer value of inherited real estate as in this case, if the acquisition value is calculated based on the actual transaction value, as in the defendant, by applying the main sentence of Article 163 (9) of the former Enforcement Decree of the Income Tax Act (hereinafter referred to as the "Ordinance of the Republic of Korea"), if it is difficult to calculate the market value at the time of acquisition pursuant to Articles 60 through 66 of the Inheritance Tax and Gift Tax Act, it would result in dumping the standard market value as the actual acquisition value without calculating the actual acquisition value. This is not consistent with the provisions of Article 97 (1) 1 (c) of the former Income Tax Act, which provides that if the actual transaction value of the acquired value is not verified, it shall not be in accordance with the provisions of Article 97 (1) 1 (c) of the former Income Tax Act, which provides for the actual transaction value at the time of acquisition of inherited or donated assets, and thus, the provisions of this case which provide for the actual transaction value at the time of conversion to the former Income Tax Act without delegation of the former Enforcement Decree.

(b) Related statutes;

The entry in the attached Form is as specified in the relevant statutes.

C. Determination

According to the provisions of Articles 94 (1), 96 (1), and 97 (1) 1 (a) and (c) of the former Income Tax Act, where the transfer value falls under the real estate located within the speculative area, the transfer value and the acquisition value shall be calculated based on the actual transaction value. In this case, if it is impossible to verify the actual transaction value at the time of acquisition, the amount calculated by applying the transaction example value, appraisal value or conversion value prescribed by the Presidential Decree in sequential. Meanwhile, Article 97 (5) of the former Income Tax Act provides that the necessary matters concerning the calculation of the actual transaction value required for acquisition, the amount equivalent to the gift tax shall be determined by the Presidential Decree. In this case, the provisions of Article 97 (1) 1 (a) of the former Income Tax Act provides that the transfer value of the real estate at the time of inheritance or donation shall not be deemed the actual transaction value at the time of acquisition because the provisions of Article 60 through 66 of the former Income Tax Act provides that the transfer value of the real estate at the time of inheritance or donation cannot be deemed the actual transaction value.

3. Conclusion

Therefore, the plaintiff's claim seeking the revocation of the disposition of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Related statutes

Article 96 of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005)

(1) The transfer value of assets referred to in Article 94 (1) 1 and 2 shall be the standard market value at the time the assets concerned are transferred: Provided, That where the assets concerned fall under any of the following subparagraphs, the actual transaction value between the transferor and transferee (hereinafter referred to as "actual transaction value") shall apply:

1. Where the relevant assets fall under the criteria of expensive houses under the provisions of subparagraph 3 of Article 89 (including the land annexed thereto);

2. Where assets are rights to acquire real estates under the provisions of Article 94 (1) 2 (a);

3. Where assets are transferred without registration under the provisions of Article 104 (3);

4. In the case of the real estate within one year after its acquisition;

5. Where real estate is acquired or transferred by illegal means, such as preparation of a false contract or a false transfer of resident registration, which meets the standards as prescribed by the Presidential Decree;

6. Where the transferor reports the actual transaction price at the time of transfer and acquisition to the chief of the tax office having jurisdiction over the place of tax payment by the deadline for final return under Article 110 (1

6-2. Where the rate of increase of real estate prices in the relevant area is higher than the national consumer price inflation rate, which falls under the real estate stipulated by the Presidential Decree, among the real estate located in the area designated by the Minister of Finance and Economy according to the standards and methods prescribed by the Presidential Decree, because the prices of

7. Other cases prescribed by the Presidential Decree in consideration of the type, holding period, number of assets held, scale of transaction, transaction methods, etc. of the relevant assets.

Article 97 of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005) as necessary expenses for capital gains

(1) In calculating gains on transfer of a resident, necessary expenses to be deducted from the transfer value shall be as follows:

1. Acquisition value:

(a) In case of assets prescribed in Article 94 (1) 1 and 2, the standard market price at the time the assets are acquired: Provided, That in case where the assets concerned fall under any of Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

(b) In case of assets listed in Article 94 (1) 3 and 4, the actual transaction price required for the acquisition of the relevant assets;

(c) In the case of proviso (a) or (b), where it is impossible to confirm the actual transaction value at the time of acquisition, the transaction example value, appraisal value or conversion value

(5) Matters necessary for calculation of necessary expenses, such as the scope of actual transaction price required for acquisition and gift tax amount shall be prescribed by Presidential Decree.

Article 163 of the former Enforcement Decree of the Income Tax Act [amended by Presidential Decree No. 19254 of Dec. 31, 2005] Necessary expenses for transferred assets

(9) In applying the provisions of Article 97 (1) 1 (a) (proviso) and (b) of the Act to the property inherited or donated (excluding the donation under the provisions of Articles 33 through 42 of the Inheritance Tax and Gift Tax Act), the value appraised under the provisions of Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencing an inheritance or of donation shall be considered as the actual transaction value at

(12) "The value of transaction example, appraisal value or conversion value prescribed by Presidential Decree" in Article 97 (1) 1 (c) of the Act means the value provided for in the provisions of Article 176-2 (2) through (4).

○ [The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19254 of Dec. 31, 2005)] and the estimate and correction under Article 176-2

(2) The term "acquisition price converted by the method prescribed by Presidential Decree" in Article 114 (5) of the Act means the acquisition price converted by the method in the following subparagraphs:

2. In the case of the rights to acquire the land, buildings and real estate under Article 96 (1) 1 through 7 of the Act (the provisions of subparagraph 6 shall apply only to the assets acquired before a fictitious acquisition date under paragraph (4)), the amount calculated by the following formula:

The standard market price at the time of transfer / sale price at the time of acquisition under paragraph (3) 1 of the same Article or the standard market price at the time of transfer (in case falling under Article 164 (8), the standard market price at the time of transfer under the same paragraph

(3) In case where the transfer value or acquisition value is estimated, determined or revised under Article 114 (5) of the Act, the method falling under each of the following subparagraphs shall be applied in sequential order: Provided, That in case where the transaction example under subparagraph 1 or the appraisal value under subparagraph 2 is deemed to be objectively unreasonable and unjust, etc. in view of the amount, etc. accruing from the transaction with the related parties under Article

1. In case where there are transaction examples of assets bearing the identity or similarity with the relevant assets (excluding stocks, etc. of stock-listed corporations or Association-registered corporations) within three months before and after the date of transfer or acquisition respectively, such value;

2. Where there exist the appraisal values which are appraised by two or more certified public appraisal corporations on the relevant assets (excluding stocks, etc.) within three months before and after the date of transfer or acquisition respectively, and deemed to bear credibility (limited to those whose standard date of appraisal is within three months before and after the date of transfer or acquisition respectively), the average value of such appraisal

3. Acquisition price converted under paragraph (2); and

4. The standard market price.

○ [Inheritance Tax and Gift Tax Act] the principle, etc. of evaluation under Article 60

(1) The value of property on which an inheritance tax or gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under Article 63 (2)) shall

(2) The market price under paragraph (1) shall be the price which is considered to be normal in cases of free trade between many and unspecified persons. It shall include the public auction price and appraisal price, and others which are recognized as the market price under the conditions as prescribed by

(3) In the application of paragraph (1), where it is difficult to compute the market price, the value assessed by the methods prescribed in Articles 61 through 65 in consideration of the kind, scale, transaction status, etc. of the relevant property.

(4) In applying paragraph (1), the value of the donated property added to the value of the inherited property pursuant to Article 13 shall be based on the market price as of the date of donation.

○ [Inheritance Tax and Gift Tax Act] Article 61 Appraisal of Real Estate, etc.

(1) Real estate shall be appraised by the following methods:

1. Land:

The publicly announced individual land price based on the Public Notice of Values and Appraisal of Real Estate Act (hereinafter referred to as "individual land price"): Provided, That the value of the land for which no publicly announced individual land price exists shall be the amount appraised by the superintendent of the competent tax office according to the method prescribed by the Presidential Decree, taking into consideration the officially assessed individual land price of neighboring similar land, and the value assessed by the multiple method